By Nigel Hill, Founder of TLF Research and Editor of Customer Insight
Customer satisfaction in the UK has fallen for the third consecutive six-month period. The July 2014 UKCSI dropped by 0.8 points, to 76.3 (out of 100), from 77.1 in January 2014. We are now seeing a marked downward trend in the satisfaction of UK customers.
UKCSI performance by sector
The fall in customer satisfaction applies to all sectors except Utilities, which achieved a small increase of 0.4 points between January 2014 and July 2014. However, it remains the lowest-scoring of the thirteen sectors in the UKCSI, with an average rating of 69.4.
The biggest drops in satisfaction by sector were seen in Leisure (-1.3), Insurance (-1.3) and Services (-1.4).
For the first time since the UKCSI began in 2008, satisfaction with the Insurance sector has fallen behind satisfaction with Banks & Building Societies.
Which companies are best?
Evidence from the UKCSI suggests that there are four broad segments of organisations, in terms of customer satisfaction: Amid the overall drop in satisfaction, there is significant variation in customer satisfaction performance among the 197 named organisations featured in the UKCSI. Only 28 organisations increased their score by at least one point compared to July 2013. But 96 have seen their score fall by more than one point over the period.
The top 50
Evidence from the UKCSI suggests that there are four broad segments of organisations, in terms of customer satisfaction:
John Lewis and Amazon continue to be the highest ranked organisations for customer satisfaction. John Lewis has reclaimed the no.1 position in UKCSI in July 2014, having been placed no.2 in January 2014. This is despite its score being 3.1 points lower than a year ago.
John Lewis receives consistently high scores across all customer experience metrics in UKCSI. Its ratings in the area of “Professionalism” - driven by customers’ experiences with staff commonly rated as helpful, friendly and competent - are particular strengths. Amazon meanwhile has emerged as a leader in the areas of “Ease of doing business” and “Timeliness”.
Two organisations appear in the top 10 for the first time. Specsavers makes its first appearance in UKCSI and Tesco Mobile’s ratings have continued to improve, making it the fourth highest ranked organisation.
The most improved organisations
A number of organisations have defied the national trend of declining customer satisfaction. Ten organisations recorded a UKCSI score improvement of more than 3.5 points between July 2013 and July 2014.
These top 10 improvers represent a range of sectors and business models. A number of them are from sectors which are not among the highest performing for customer satisfaction. Their performance demonstrates that despite the influence of economic conditions and rising customer expectations, it is possible to improve customer satisfaction by focusing on customer experience and service.
Sustained improvement in customer satisfaction
Short term improvements in customer satisfaction are an encouraging indicator of future performance, but realising the business benefits of better customer service requires a sustained and consistent focus.
The three organisations with the largest rise in customer satisfaction over the past five years (since July 2009) are:
• Northern Ireland Electricity, up 13.8 points
• Homeserve, up 10.6 points
• Nationwide (Building Society), up 7.1 points
The 12 organisations with UKCSI scores above 80 in every set of results since July 2009
Why is customer satisfaction falling?
Here are the thoughts of Joanna Causon, CEO of the ICS:
"There are a number of factors which may account for the falling trend in customer satisfaction. Customer expectations are continuing to rise and their needs are evolving more rapidly, with convenience, ease of doing business and speed seen as particularly important. For the first time, this UKCSI report shows the levels of satisfaction by age group; the fact that younger people are on average less satisfied than older age groups suggests that customer expectations will continue to rise in future. As demand and confidence grow, organisations may be tempted to shift their priority away from retaining customers through focusing on customer experiences, towards more emphatically increasing customer numbers and market share. However, evidence from the UKCSI continues to point to clear and consistent linkages between high levels of customer satisfaction and trust, loyalty, likelihood to remain a customer, and in the Retail food sector in particular, higher sales growth."
UKCSI score by age group
There are a number of implications for organisations in the customer satisfaction differences between customer segments:
- Organisations need to develop a deep understanding of the needs and preferences, across the whole customer experience, of the customer segments they serve.
- The relatively lower levels of satisfaction in younger age groups suggest that, now and in the future, organisations will continue to be challenged by rising customer expectations.
Why customer satisfaction matters: the business impact
The declining trend in customer satisfaction has important implications for business performance in two key respects:
For individual organisations
The link between customer satisfaction and future business performance means that those organisations with high and / or improving satisfaction will be much better placed to take advantage of increasing customer demand than those with weaker levels of satisfaction.
For the UK economy
There is a risk that falling levels of customer satisfaction in the UK may impact negatively on the country’s reputation as an attractive place to invest and do business. Moreover, the ability of UK companies – in all sectors - to benefit from growing demand in global markets is underpinned by the customer experience they offer.
Customer satisfaction drives loyalty
Customer satisfaction drives recommendation
Retail food year on year sales growth
According to Joanna Causon this is how organisations should respond to the latest UKCSI results.
- It will be important to invest in customer insight and apply it with greater speed and agility as customer needs and preferences evolve.
- Ease of doing business and convenience have a growing resonance and need to be embedded in the experiences organisations offer their customers.
- Customer service skills, capabilities and standards need to be reviewed continuously to ensure that they are current and relevant in a context of heightened customer expectations.
- Above all, there needs to be a strategic leadership commitment to customer service and a focus on the whole customer experience, especially in sectors where multiple partners and entities are involved in providing service to customers.
And a final word from Jo:
“Now is a time for organisations to hold their nerve and maintain focus on the customer experience. Those that do so will be best positioned to benefit from the sustainable and tangible business benefit of customer service.”